Breyer on Arbitration: The Retired Justice Goes Public on Class Waivers and More

Retired U.S Supreme Court Justice Stephen G. Breyer provided a broad picture about the interrelationship of courts and arbitration tribunals as the keynote speaker at Columbia Arbitration Day at Columbia Law School in New York.

Although the event was an arbitration conference, Breyer spoke generally about the Supreme Court and about how our background informs the way we view the court and the Constitution.

The April 14 discussion with Columbia Prof. George A. Bermann was a rare live discussion by a justice that included a focus on alternative dispute resolution issues.  Breyer discussed seminal arbitration cases that were a part of his 28-year career on the nation’s top Court.

During his hour-long conversation, Breyer stated that courts have two roles. First and foremost, they resolve disputes.  And they also clarify, create, explain, and update law. Since, unlike courts, arbitration does not follow precedent, if cases are taken away from courts, then courts cannot update commercial law, he said. 

He also said that arbitration is often not cheaper or faster. To Breyer, who retired from the Court last summer, arbitration simply has better judges, i.e., judges with more expertise and people who really understand commercial law. Thus, if people lose faith in courts, arbitration is an alternative way to resolve disputes. 

Then Justice Breyer spoke about “gateway” and “non-gateway” issues. Gateway issues implicate consent to arbitration that a court will presumptively resolve itself if called upon to do so. Gateway issues include whether there is an agreement, and whether two parties agreed to an arbitration, unless there is a clear and unmistakable delegation to the arbitrators. 

Non-gateway issues are those issues that a court will leave for arbitral resolution even if it is asked to decide the point. For example, in BG Group PLC v. Argentina, 572 U.S. 25 (2014), in a Breyer opinion, the Court held that (1) the task of interpreting a treaty’s local litigation provision fell to the arbitrator, and courts should give deference to the arbitrator’s findings; (2) whether a party has satisfied a precondition to arbitration is a procedural matter left for arbitrators under ordinary contract law; and (3) the arbitrators’ determination that the local litigation provision did not act as a bar to arbitration was within their interpretative authority. Breyer commented that the arbitration clause should have been drafted in a way that made the preconditions for arbitration more explicit. 

Justice Breyer concluded his keynote conversation by speaking about class action suits under arbitration. Though he didn’t expressly name the case, he referenced his dissent in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), in which he argued that class arbitrations are appropriate ways to resolve claims that are minor individually, but significant in the aggregate, and the Court was wrong to hold that the Federal Arbitration Act preempts California contract law related to arbitration agreements.

During the keynote conversation, Breyer told the audience that whether a class action is permissible should depend on the arbitration clause. For a class action to be permissible, an arbitration clause needs to explicitly state that a class action is permissible. If the arbitration clause is silent or if it is ambiguous, then a class action is not permissible. If parties agree that a class action can proceed, Federal Rule of Civil Procedure 23 should apply to class actions in arbitration. 

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The author, a second-year Brooklyn Law School student in New York, is a CPR 2023 Spring intern.

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